Crypto Markets Face Multiple Pressures: China Mining Resurgence, US Labor Weakness, and December Token Unlocks

China's Mining Operations Return Despite 2021 Ban

Nearly four years after China's comprehensive cryptocurrency mining ban, Bitcoin mining operations are making an unexpected comeback in the world's second-largest economy. China now accounts for approximately 14% of global Bitcoin mining, making it the third-largest mining country after the United States and Kazakhstan ^[1]. Research firm CryptoQuant estimates the actual figure may be even higher, between 15% and 20% of global capacity ^[1].

Before the 2021 crackdown, Chinese miners produced about 65% of the world's Bitcoin computing power ^[1]. The People's Bank of China declared all cryptocurrency transactions illegal in September 2021, citing concerns about financial risks, capital outflows, and high electricity consumption.

The resurgence is particularly evident in provinces like Xinjiang and Sichuan, where surplus electricity production has created favorable conditions for mining operations ^[1]. Sales data from major mining equipment manufacturer Canaan illustrates the trend: China represented only 2.8% of the company's revenue in 2022, but this figure jumped to 30% by 2023 and reportedly exceeded 50% in the second quarter of 2025 ^[1].

"Many inland regions of China produce more electricity than they can efficiently transmit to coastal cities," according to the analysis ^[1]. This stranded energy, combined with overdeveloped data center capacity and rising Bitcoin prices, has created an optimal environment for mining activity to restart.

US Labor Market Softening Pressures Risk Assets

While China's mining sector rebounds, cryptocurrency markets face headwinds from weakening US employment data. The unemployment rate has climbed from the low-3% range in 2022-2023 to the mid-4% area, its highest level in several years ^[2]. Monthly nonfarm payroll gains have also slowed significantly from post-pandemic levels.

The labor market's condition matters critically for Bitcoin and cryptocurrencies because employment data serves as a proxy for consumer health and recession risk ^[2]. Weak employment numbers typically prompt investors to reduce exposure to volatile assets, creating a "growth channel" that pressures crypto prices.

Historical trading patterns reveal Bitcoin's sensitivity to jobs reports. One study found Bitcoin averaged a +0.7% move when payrolls beat forecasts and -0.7% when they missed ^[2], demonstrating how traders adjust high-beta exposure based on employment surprises.

However, the relationship is nuanced. Weak labor data can also trigger central bank rate cuts, potentially lowering real yields and expanding global liquidity—factors that have historically supported cryptocurrency valuations ^[2].

December Token Unlocks Threaten Altcoin Stability

Adding to market pressures, December brings approximately $3.7 billion in scheduled token unlocks across major cryptocurrency projects ^[3]. While this represents the lowest monthly unlock volume in the past six months, several high-profile projects face significant pressure.

EigenCloud (formerly EigenLayer) leads the month with 10.79% of circulating supply—roughly $22 million—being unlocked for investors and early contributors ^[3]. The timing is particularly challenging as the Ethereum restaking project recently hit a new all-time low price.

Ethena (ENA) faces recurring weekly unlocks totaling approximately 212 million tokens monthly through April 2028, valued at around $70 million ^[3]. The synthetic dollar protocol has already lost 33% over the past thirty days.

Hyperliquid (HYPE), considered by many as a standout project in the current bull market, faces its second major unlock on December 29. While the decentralized exchange handled its first unlock well in late November, the continued token inflation remains a key concern for investors ^[3].

Other projects under pressure include Starknet (STRK) with 5% of supply unlocking, Linea (LINEA) at 6.76%, and Plasma (XPL), which faces monthly unlocks of $20 million despite trading more than 80% below its all-time high ^[3].

Shifting Policy Landscape

Despite immediate market pressures, China's attitude toward digital assets appears to be evolving from outright rejection toward selective acceptance. Hong Kong's stablecoin licensing framework took effect in August 2025, while mainland authorities are exploring yuan-backed stablecoins and rapidly advancing the e-CNY central bank digital currency ^[1].

These developments suggest China's approach is shifting "from comprehensive bans to controlled experimentation," potentially allowing digital assets that support financial stability and national economic goals ^[1].